Thursday, October 25, 2007

The bull gets mauled, Dragon's spending spree

Timing is everything in life. Just ask Merill Lynch. While all its peer investment banks reported for quarter periods ending August and therefore only took a partial hit from the credit crunch debacle, Merill with a quarter ending 
September took a full hit. It had to write-off $7.9bn of sub-prime mortgages that are now very very sub-prime which led to $2.3bn losses for the quarter. The added problem and which may lead to the firing of the only black CEO
 in the investment banking world, is that the write-off is $2.9bn higher than they warned about only last month.

The Chinese have now started spending some of those dollars they've been accumulating. In last 2 or so months, they've bought 9% of Blackstone (one of the world's largest private equity groups), bought a small stake in Barclays, another in Bear Stearns (another investment bank caught short by credit crunch) and today announced that's its also buying 20% of Stanbic (largest bank in Africa by assets). Stanbic have obviously just bought CFC and have serious ambitions for Africa. Watch this space...

Finally, for all those who are nuts about planes (stand up Banks), the A380, the double-decker of all planes finally took its first real maiden flight from Singapore to Sydney today. Its built to carry 800 peeps and will have an upper and lower economy so you can walk and down the stairs instead those clamped alleyways on a normal plane. I will wait for KQ, Virgin or BA to acquire one so I can fly on it-which might be a while given all the airports are having to be extended to accommodate it...

4 comments:

Ssembonge said...

I think Merill Lynch owned up and took the hit upfront. Citi meanwhile is trying to cover up their mess cause they are holding onto rotten eggs.

MainaT said...

Ssem, I think Citi and to an extent Bear Stearns still have a bunch of these sub-prime things to get rid of and they will probably attempt do so over this quarter and the first quarter in 08.

Re O'Neal@Merill, I get the feeling his goose may already be cooked. They had some story about him approaching Wachovia about a merger.

lmangoli said...

Thats food for thought for KQ considering its competitors are giving it a run for its money.

lmangoli said...

I suspect there are many more holding on to the rotten eggs as this will only be revealed by the upcoming financials in 08.
How easy could the sub-primes be gotten rid of now that everythings out in the open? Thats my guess too.